APPEL: What Is The Economic Foundation Of New Orleans Now?

I know that I am screaming into the face of a hurricane but let me try one more time. No city can exist unless there is an economic basis for its existence.

Simple right? History is replete with cities that were once vibrant but have since disappeared. Eons ago cities were originally a source of protection, usually the local king would provide an army, food reserves, and city walls to protect the people in times of invasion. In exchange the people provided the king with his wealth.

Over the millennia that morphed into a different relationship. As security became centralized at the state level, cities became hubs for economic activity. The combined wealth of individual cities became the source of wealth of the state. No more was local defense an important reason to live in a city, the path to economic prosperity was.

New Orleans may be the prime example of what happens to a city when it loses its economic raison d’etre. We all know that New Orleans was once the Queen City of the South and later the Gateway to the Americas. Today it is just another medium sized city with a weak economic structure, a growing core of poverty and all the social ills that accompany that. On a national level, New Orleans has become a taker city and not a giver city. A city whose only claim to fame is its undefined “culture”, not its attractiveness as a prosperous city.

So how do we think that doing the same things, following the same path, will bring any improvement? Only someone living in La La Land can possibly think that way. Yet watching the leaders of the City, that seems to be exactly the way they think. They act as if the way to address low incomes, income inequality, and societal ills is by applying the same tired old social fixes that have only exacerbated our problems.

Everyone knows that I am an unabashed capitalist. I believe that I can demonstrate through historical example how capitalism has helped cities remain relevant, and how a failure to support capitalism has led to decay. Perhaps the most cited example is Detroit. Through the middle of the 20th century, free market capitalism flourished and everyone in Detroit prospered from it.Toward the end of the century union influence became so great that it distorted the rules of capitalism and destroyed businesses’ ability to produce products at costs and quality that appealed to consumers. The end was swift as manufacturing decamped from Detroit and the city became a poverty-stricken shell of what it had been. Much of the business that left Detroit moved South, but none came to Louisiana or New Orleans. Why were other southern states able to capitalize on Detroit’s demise? They understood what capitalism required and they embraced it, so their people prospered even as we were left out.

To an extent New Orleans has followed the same pattern as Detroit, only it has taken a bumpier road. First, we lost many elements of maritime commerce that were the original reason we are here at all. Then we lost the energy sector and the headquarters of our major banks. Now, at least for the unforeseeable future, we have lost the tourism sector. Today there is nothing left for us to fall back on and the expectation of wholesale evictions, bankruptcies, and rapid economic decline beckons. Politicians love to say without further definition that we are “resilient”. In fact, we are not, without constant vigilance we are vulnerable to economic malaise just as every other city is vulnerable.


My expectation is that in reaction to the impending loss of the Federal stimulus that has kept at least some of our economy afloat, the leadership of our City will fall back on government intervention as the way out. That is too bad, as government intervention is an anathema to business that will only prolong our local recession and will retard the potential of a future recovery. So far, I have not seen any evidence that state or City leadership has any idea how to apply capitalist principles to build a more prosperous future. Worse, they seem to operate from the perspective that Louisiana and New Orleans is in an alternate universe, one in which there is an alternative to capitalism. There is not.

Though I am not naïve enough to believe that there is any chance of it, I propose that what New Orleans requires is a complete overhaul. First, we need to acknowledge that while it is true that we are currently on the road to decline, failure is not an option and bold action is required. We need a vision of where we should be in 5, 10, and 50 years. We need to formulate plans utilizing the best minds in the world, not the usual politically correct thinkers, but those that can think out of the box, yet be practical enough to align their thoughts with the reality of our capitalist nation. We need to restructure the business-government relationship to attract prosperity producing jobs and surrender the notion that endless social programs and wealth transfer, and not good jobs, will do anything except keep us trapped in an economic swamp. And we need the political courage to execute on our strategy.

The problems that we face are both short and long-term in their nature. If in the short term we continue to dig ourselves into our own grave, then the long-term is not worth discussing. Bold leadership, leadership that is willing to risk it all on the prosperity of our City is needed.

New Orleans has two choices; continue down the road to economic demise or remake itself in the image of so many other economic powerhouses that have accepted aggressive capitalism and made the right adjustments. There is an option. But history alone will tell if we chose to take the path to prosperity, and if we did so before we had reached the point of no return.



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